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That is an awful way to think about it.

At any given instant, you are about to start investing in something. You may have to stop investing in something else to do it. Your goal at any instant is to maximize the profit of your next few moments of investing. An effective strategy for you MAY to go long, as you describe, holding on to an investment for a long time. But that doesn't mean it's the most effective strategy for everyone.

The farmer may do better to unload his hens, live off of cattle for a few years, and then move back to hens.




No, it really isn't. You're trying to time the market, which is about as reliable as gambling unless you intend to dedicate your entire life to it. The parent post is correct, recessions are opportunities to buy what you were going to buy anyway at a cheaper price and get more for your money, provided of course you don't need the money for other purposes in the near future.


Recessions are opportunities to buy... if you have cash. If you were long in the market at the peak, then you don't have any cash. If it's something you were going to "buy anyway", then you'd have already bought it... unless you were holding cash and trying to time the market. You can sell something, and buy at a discount, but only by selling something at the same discount.

I believe that's what the parent meant. At any given moment your money is somewhere: stocks, cash, bonds. You transfer from one to the other when you feel the time is right for it. In that sense every move is market timing.

That does imply that most people shouldn't move their money very often. Do some research, buy and hold, and don't worry overmuch about whether you bought near the top or the bottom. Put new money (e.g. salary) into something with low overhead, like an index fund, unless you've got good reason to think you can do better with a specific choice of stock.

If you find a bargain, buy it. But buying bargains is a matter of timing: it's only a bargain if it goes up eventually.


> You can sell something, and buy at a discount, but only by selling something at the same discount.

Most people sell labor or knowledge for 20-50 years during their lives. Pretty much continuously. So during a recession you can spend some of the money you get from your labor on stocks that are "on sale".


Except that - as we (hopefully) learned with the last recession - you're significantly more likely to be outside the "most people" category in this case, because layoffs tend to happen when companies have less money.


Unless you lose your job during said recession and struggle to find another.


Yes, if you don't have money to invest, you cannot invest. What's your point?


The point is recessions aren’t opportunities for everyone and can be extremely damaging. If you have to spend that 50c on the dollar, you’re doubly screwed. You don’t get to buy at a discount and your savings are depleted much faster - twice as fast actually.


Well, for one, if you have a solid idea that the market is going to crash, and that you're going to soon not be able to invest more, and that in fact you're going to have to draw down your investments to survive, then now is a better time to sell than later.

That's a lot of ifs, but that's precisely what we're discussing - how best to behave in different circumstances. "Always hold" isn't the best answer in all circumstances, despite what many in this thread are saying.


You're conflating things that shouldn't be conflated.

1) Your goal in investing

2) Heuristics to achieve that goal

The goal is to maximize your investments over a time, as I stated. Yes, you're absolutely right that holding is a phenomenal heuristic. But that doesn't mean it's always the correct thing to do.


Your goal at any instant is to maximize the profit of your next few moments of investing.

This is only true for short traders or others who measure profits on a horizon measured in hours or less. For everyone else, the chicken example is pretty good, though the feasibility depends on the timescale over which you will be investing.


> Your goal at any instant is to maximize the profit of your next few moments of investing.

Not at all. My goal with investing is "How do I get a good return on investment in the next X amount of time?", for various values of X that tend to be as long as reasonably possible.

> The farmer may do better to unload his hens, life off of cattle for a few years, and then move back to hens.

The comment you're responding to gave an example of hens dropping in price. That's the worst time to unload them. Trying to time the market is a great way to buy high and sell low.


This entire question is predicated on the firm belief that hens are about to drop in price.

This would be the best time to unload them, if you don't have a long hold philosophy.


The comment in question said "The price of hens has just dropped by 50%!". That's a bad time to sell.

If you can predict "the price of hens is about to drop" more reliably than the market can, that would make you exceptionally rare. And if you don't already know and have evidence that you can make such predictions reliably, the safe bet is that you can't. Many people try, and fail, and end up buying high and selling low.


There are a plethora of investing choices, including not investing. Bitcoin, Gold, Bonds, etc. If someone is investing in HENS right now, it's not unreasonable to suggest they may want to change their strategy for the next couple of years.

Similarly, if someone is planning on planting SOY, I'd try to talk them out of it.

Would you seriously not try to talk someone out of planting soy?


> The farmer may do better to unload his hens, life off of cattle for a few years, and then move back to hens.

This is only true if the farmer can predict the future.


This whole discussion is based on an indicator that people believe is yelling at us "the price of X is about to fall".


There's always some indicator which yells that, I don't see any reason to believe this one over any of the other ones.

There's been a consistent drumbeat since the end of the great recession that "the next big drop is coming, just look at this chart!". Spoiler alert, they were all wrong.


Most likely not wrong. Simply too early.


They were absolutely wrong. Their claim was that a specific line on a chart held deeper meaning, despite having no basis in science. They were totally incorrect.

Don't let these charlatans off the hook, they largely have no idea how the market works.


Now the cost of entry to egg farming is 50% what you experienced and competition doubles as new firms can compete at rates below the margin you need to be profitable given your higher cost of entry. Although you also benefit from cheaper hens you are unable to contest with new firms and could go out of business as your original debt to buy hens becomes unsustainable.

In other words, external forces are unpredictable. Although not always the most profitable, proper risk and market assessment of an industry, its trends, and possible future are important considerations when launching a new endeavor. However, if we all knew hens were about to drop to half price tomorrow nobody would be buying today decreasing demand and ballooning supply until the prophecy is self fulfilled.


Another commenter pointed to this: https://awealthofcommonsense.com/2014/02/worlds-worst-market...

tl;dr: Even the worst market timer would do well to just hold on to stock.


Or you use a robo-investor which does the above for you, and then your only decision is, "Do I invest more in the market or pull money out of the market?" That's where the question becomes as simple as the chickens metaphor.


I don't think robo-investors do that. They rebalance your portfolio (and that too not very often), and buy more of the cheaper stuff, so more in line with your GP than your parent comment.




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